Below are several financial statement items for fiscal year 2019 for two apparel companies, lululemon athletica, a designer, distributor and retailer of healthy lifestyle inspired athletic apparel, and The Gap Inc. a leading global apparel retail company. Use the financial information to answer the questions a), b) and c) below.

lululemon The Gap Net income $ 484 $ 1,003 Sales 3,288 16,580 Average assets 2,042 8,019 Average stockholders equity 1,521 3,349

a) Calculate each companys return on assets (ROA) and return on equity (ROE). Comment on any differences you observe.

b) Disaggregate the ROA for each company into profit margin (PM) and asset turnover (AT). Explain why one of the companies has a higher ROA than the other - is it because of PM or AT or both? Explain the business reasons why this could be.

c) Disaggregate the ROE for each company using the full, traditional Dupont analysis, including ROA as disaggregated in b). Comment on any differences you observe, and explain the business reasons why this could be.